MeT's heatwave prediction sends AC stocks to fresh highs

The MeT department has predicted dry weather and an intense heat wave that is expected to hit India this week, putting millions of people at risk.

Reacting to this, stocks of air-conditioner makers surged to record highs in today's trade led by investors who turned towards these scrips.

"The kind of volume we have witnessed across space does indicate an aggressive buying. It's the start of season and as per predictions May - June can be worse so given that it is still an initial story which has much longer time to play going forward," said Mustafa Nadeem, CEO, Epic Research

Shares of AC manufacturers Blue Star (up 2.04 per cent), Whirlpool of India (up 2.87 per cent), and Voltas (up 0.70 per cent) have added gains to the BSE.

"Since the forecast is out, all AC stocks have been soaring to give return of more than 8% in just five days of the time frame. Shares of AC manufacturers Blue Star Ltd, Whirlpool of India, and Voltas hit a record high on Thursday. These stocks have risen 36.9 per cent, 33.5 per cent, and 25.8 per cent, respectively, for the year to date, while so far in March, they have rallied 20 per cent, 18 per cent and 13 per cent, respectively," said Abnish Kumar Sudhanshu, Director and Research Head, Amrapali Aadya Trading and Investments.

This early onset of summer coupled with the fact that AC penetration is low in India has provided the opportunity for AC manufacturers to serve demand and tap the market at the right time, added Abnish Kumar.

"Overall, we still foresee investors to look to buy into these stocks for investment on the back of future outlook. We feel Voltas still has the better opportunity than its peers," he further added.

Shares of Voltas hit nearly a 3 per cent intraday high on Thursday while Blue Star rose 4 per cent.

The stock of Hitachi rose to its 52-week high to Rs 1,830 on the back of positive business prospects this season.

"Voltas has seen a double top breakout as it has already seen somewhat 10 per cent appreciation in last few days so going forward we feel that this stock has potential towards 445 - 460 while Bajaj electricals is seen hitting higher trajectory with upside potential towards 360-370," added Nadeem.